Investing.com – The US dollar lost positions in early trading Thursday in Europe, although it remains near two-month highs as traders await next week’s US Federal Reserve meeting.
By 09:15 AM ET (0915 GMT), the euro, which tracks the currency against a basket of six other major currencies, was down 0.1% at 104.002, just below a two-month high of 104.70 set last week.
Another rise from the Fed?
Everything indicates that it will stop next week in the cycle of raising interest rates, which has lasted for a year, and expectations are growing that this is a temporary situation and a rate hike remains a clear possibility this year, perhaps in July.
This growing expectation that US interest rates will continue to rise stems from unexpected rate hikes this week, with both central banks bemoaning flat inflation.
The Fed will study the latest data before making a decision on the interest rate, and any move above the annual rate of 4.9% in May could boost a further rally.
“The US economy continues to surprise to the upside, while those in Europe and China were weaker than expected… This pattern must abate before a shallow decline in the value of the dollar is on the horizon again in the medium term.” Goldman Sachs points out in a note.
ECB officials maintain their aggressive stance
The pair aims for a 0.1% rally to 1.0711, and policy makers remain tight on interest rate futures as they try to rein in interest rates, which remain high.
Dutch central bank chief Claes Nott was the latest to speak of further tightening, saying on Wednesday that he was “still not convinced that the current tightening is sufficient”, adding that “inflation could remain very high for a long time to come”. Then it will be necessary to increase the rate.
However, recent economic data points to a region still struggling to recover from the difficulties caused by the sharp rise in energy prices last year.
The latest figure from the S is expected to show that the region stagnated in the first three months of this year and only grew.
Unemployment data could weigh on the British Pound
The pair targets a 0.1% rise to 1.2452, to remain in a narrow range as traders await the wage data release next week.
The pair rose by 0.3% to the level of 0.6667, still benefiting from an unexpected rate hike by the Reserve Bank of Australia this week, and the pair fell by 0.2% to 139.88, receiving some support from the bullish revision of the first quarter reading in the country.
The pair rose 0.1% to 7.1333, hitting a six-month low against the dollar, amid expectations of an interest rate cut by the People’s Bank of China this month.